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Zandi: Lawmakers should avoid putting restrictions on jobless benefits, pay for an extension

The lack of an agreement on a payroll tax cut and unemployment benefits bill will cut into economic growth by about 7/10th of a percent and create about 500,000 job losses while the economic recovery skates on thin ice.

A House Republican plan doesn't call for mandating drug tests in states, but, instead, allows them to set up their own system.

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Zandi said it is "vital" to extend federal emergency unemployment benefits for the rest of the year along with a payroll tax cut.

The comments come as a 20-member conference committee remains mired in a rhetorical muck as House and Senate leaders launch barbs at each other over who is blocking a final agreement, which is needed by the end of February before the two-month extension expires.

Rep. Dave Camp (R-Mich.), chairman of the conferees panel, asked leaders on Tuesday to tamp down their talk that lawmakers won't be able to reach an deal, following another meeting that concluded with seemingly little progress made.

What's clear at this point is that lawmakers disagree about how pay for the bill, including a freeze on federal workers' pay.

Congressional Democrats are expected to announce a proposal later Tuesday for the continuance of unemployment insurance — that plan won't include the GED or drug-testing provisions that were part of a House-passed bill but could include a cut in federal benefits. Those emergency benefits, which are up to 99 weeks in states with high unemployment, are expected to drop automatically this year as the job situation improves.

States offer up to 26 weeks of benefits while the federal government provides another 73 weeks, based on the jobless rate. Under a White House proposal, the maximum number of weeks would drop.

So it will be up to conferees to determine a number that matches the economic conditions in the states.

The House Republican proposal would cut benefits by 40 weeks from a maximum of 99 weeks to 59 weeks within six months.

Advocates have said that the number will need to be higher than that but it is uncertain at to where between 99 and 59 lawmakers will land although 79 has been discussed.